With many homes today going well over listing price you may be asking yourself, “What’s my home worth?” Currently, there might be a gap between what people are willing to pay versus what an appraisal says it’s worth. Read below the answers to some of the top questions you might have about appraisals.
As much as a home appraisal is a commonly accepted part, and a significant part, to buying or refinancing a home, basic questions repeat themselves when people delve into the process. Here are the 4 most common questions, and their short answers:
- What is a home appraisal?
- How much does an appraisal cost?
- How is the appraisal process conducted?
- What if the appraised value of the home is higher or lower than expected?
What is a home appraisal?
An appraisal is an estimate of the fair market value of a home, and it is aimed at assuring that the home’s purchase or refinance amount is reasonable. It educates a buyer as to the competitive value of the home in the market and protects the lender from lending more money than the value of the home.
How much does an appraisal cost?
The average appraisal fee for a single-family home ranges between $312 and $407, However, keep in mind that there are several factors that can increase the amount, such as the size of the property, its location and the type of loan the buyer or borrower is seeking to obtain.
How is the appraisal process conducted?
The appraiser will likely perform four steps during the appraisal process:
(1) Research the home’s history
(2) Evaluate the market
(3) Conduct an on-site inspection
(4) Submit a report
What if the appraised value of the home is lower than expected?
If the appraised value is less than the purchase price, there are 4 possibilites:
- The seller and buyer renegotiate a lower purchase price.
- The buyer agrees to pay the original purchase price and increases the down payment to meet the lender’s loan-to-value ratio.
- The buyer or seller disputes the appraisal report
- The buyer or seller cancels the transaction.
In conclusion, while a home appraisal can seem to be just another task amongst so many to complete when purchasing or refinancing a home, it’s an important process aimed at providing financial protection for all parties.
Let us know if you have other questions or need more explanation on any of these topics. We are here to help you navigate this step well and understand all that is involved as well as all the other steps involved in the closing process.